CFD Markets News and Forecasts — 30-11-2018

• Biggest Challenge Ahead Is Persistently Low Inflation

• Central Banks Have Options to Deal With Low Neutral Rates

• Doesn't Comment on Rate, Economic Outlook

Before the bell: S&P futures -0.27%, NASDAQ futures -0.18%

U.S. stock-index futures fell slightly on Friday, as investors’ attention turned to trade developments between the U.S. and China at the G20 summit in Argentina.

Global Stocks:

Wall Street. Stocks before the bell

(company / ticker / price / change ($/%) / volume)

Downgrades before the market open

Goldman Sachs (GS) downgraded to Neutral from Buy at BofA/Merrill

Real gross domestic product edged down 0.1% in September, following seven consecutive months of growth. Lower output across all goods-producing industries (-0.7%) was the main reason for the decline. The output of services-producing industries edged up 0.2% as growth in most sectors more than offset declines in wholesale trade and in finance and insurance. Overall, 10 of 20 industrial sectors declined in September.

There was a 1.2% contraction in mining and quarrying in September.

Oil and gas extraction fell 2.9% in September, the third decline in four months, as all types of extraction activities were down. Conventional oil and gas extraction was down 2.3%, more than offsetting the previous four monthly increases, as both crude petroleum and natural gas extraction contracted. Crude petroleum production in Newfoundland and Labrador was at its lowest level since June 2016, in part due to maintenance work at some facilities in September. Non-conventional oil extraction declined 3.6%, partly as a result of maintenance shutdowns at some facilities along with lower crude bitumen production in Alberta.

Support activities for mining and oil and gas extraction were down for the fourth time in five months, contracting 1.6% as all types of support activities declined.

HP Inc. (HPQ) reported Q4 FY 2018 earnings of $0.54 per share (versus $0.44 in Q4 FY 2017), in line with analysts’ consensus estimate.

The company’s quarterly revenues amounted to $15.366 bln (+10.3% y/y), beating analysts’ consensus estimate of $15.129 bln.

The company also projected Q1 FY 2019 EPS of $0.50-0.53 (versus analysts’ consensus estimate of $0.52) and FY 2019 EPS of $2.12-2.22 (versus analysts’ consensus estimate of $2.18).

HPQ rose to $23.25 (+1.71%) in pre-market trading.

• Brent crude, the global oil benchmark, was trading down 1.07% at $59.27 a barrel on London's Intercontinental Exchange

• West Texas Intermediate futures, the U.S. standard, were trading down 1.38% at $50.74 a barrel on the New York Mercantile Exchange

According to preliminary estimates, in November 2018 the Italian consumer price index for the whole nation (NIC) decreased by 0.1% on monthly basis and increased by 1.7% with respect to November 2017, up from +1.6% in the previous month.

The dynamics of inflation in November was due to the slight acceleration of prices of different types of products (thereof Processed food including alcohol from +1.0% in October to +1.3%, Unprocessed food from +0.8% to +1.1%, Services related to recreation, including repair and personal care from +1.0% to +1.2% and of Services related to transport from +1.8% to +2.0%). These accelerations prevailed on the slowdown of prices of Non-regulated energy products (from +9.5% to +7.8%) that, together with prices of Regulated energy products (stable at +10.7%), explain almost half of the general inflation rate.

Both Core inflation excluding energy and unprocessed food and inflation excluding energy were +0.9% (up respectively from +0.7% and +0.8% in October).

The euro area (EA19) seasonally-adjusted unemployment rate was 8.1% in October 2018, stable compared with September 2018 and down from 8.8% in October 2017. This remains the lowest rate recorded in the euro area since November 2008. The EU28 unemployment rate was 6.7% in October 2018, stable compared with September 2018 and down from 7.4% in October 2017. This remains the lowest rate recorded in the EU28 since the start of the EU monthly unemployment series in January 2000.

Eurostat estimates that 16.626 million men and women in the EU28, of whom 13.172 million in the euro area, were unemployed in October 2018. Compared with September 2018, the number of persons unemployed decreased by 4 000 in the EU28 and increased by 12 000 in the euro area. Compared with October 2017, unemployment fell by 1.523 million in the EU28 and by 1.121 million in the euro area.

Euro area annual inflation is expected to be 2.0% in November 2018, down from 2.2% in October 2018, according to a flash estimate from Eurostat, the statistical office of the European Union. Looking at the main components of euro area inflation, energy is expected to have the highest annual rate in November (9.1%, compared with 10.7% in October), followed by food, alcohol & tobacco (2.0%, compared with 2.2% in October), services (1.3%, compared with 1.5% in October), and non-energy industrial goods (0.4%, stable compared with October).

After the decline observed in the last month, in October 2018 the number of employed people is substantially unchanged. The employment rate stood at 58.7%, stable on the previous month.

For the second month the number of unemployed people increased (+2.4%, +64 thousand), involving women, men and all age groups. The unemployment rate rose to 10.6% (+0.2 percentage points in a month) and the youth rate slight increased to 32.5% (+0.1 percentage points).

In October, inactive people aged 15-64 decreased among both genders and all age groups excluded people aged 25-34 (-0.6%, -77 thousand). The inactivity rate declined to 34.2% (-0.2 percentage points).

In the period August-October 2018 employment went down compared with the previous quarter (-0.2%, -40 thousand). The decrease involved women, men and people aged 15-49, while over 50 grew.

In the same quarter, the fall of employment was accompanied by the decrease of unemployment (-2.5%, -70 thousand) while the inactivity went up (+0.4%, +56 thousand).

The KOF Economic Barometer decreases by 1.1 points in November, from 100.2 points in October (revised from 100.1 points) to 99.1 points. This month’s decline was in particular due to less favourable export prospects. The impetus from foreign demand is likely to weaken somewhat in the coming months. The development in the banking and insurance sector may lose some of its momentum. By contrast, slight support for the economy will come from the construction sector and private consumption. The manufacturing sector in particular is also resisting the downward tendency. The indicators for the manufacturing sector have developed positively overall.

Over a year, the Consumer Price Index (CPI) should slow down to +1.9% in November 2018, after +2.2% in October, according to the provisional estimate made at the end of the month. The drop in inflation should come from a deceleration in the prices of services, energy, food and tobacco. Those of manufactured products should decrease a little less than in the previous month.

Over one month, consumer prices should edge down: −0.2% after +0.1% in October. After seven months of consecutive rise, energy prices should fall back, in the wake of petroleum product prices. Those of services should also drop due to a seasonal downturn in airfares and a fall in communication services. Food prices should drop, as in the previous month. Those of manufactured products should rise slightly after a stability in the previous month.

Year on year, the Harmonised Index of Consumer Prices should slow down to +2.2% after +2.5% in October. Over one month, it should edge down by 0.2% after +0.1% in the previous month.

EUR/USD

Resistance levels (open interest**, contracts)

$1.1483 (3487)

$1.1455 (2615)

$1.1434 (2867)

Price at time of writing this review: $1.1388

Support levels (open interest**, contracts):

$1.1349 (5199)

$1.1320 (2437)

$1.1283 (4280)

Comments:

- Overall open interest on the CALL options and PUT options with the expiration date December, 7 is 124855 contracts (according to data from November, 29) with the maximum number of contracts with strike price $1,1200 (5746);

GBP/USD

Resistance levels (open interest**, contracts)

$1.2984 (2420)

$1.2915 (1486)

$1.2864 (660)

Price at time of writing this review: $1.2779

Support levels (open interest**, contracts):

$1.2744 (3222)

$1.2727 (1305)

$1.2705 (2089)

Comments:

- Overall open interest on the CALL options with the expiration date December, 7 is 59148 contracts, with the maximum number of contracts with strike price $1,3500 (4724);

- Overall open interest on the PUT options with the expiration date December, 7 is 46760 contracts, with the maximum number of contracts with strike price $1,2500 (3871);

- The ratio of PUT/CALL was 0.79 versus 0.80 from the previous trading day according to data from November, 29

* - The Chicago Mercantile Exchange bulletin (CME) is used for the calculation.

** - Open interest takes into account the total number of option contracts that are open at the moment.

Mixed start of trading on the stock markets of Europe is expected, after mainly positive trading in Asia. Investors are cautious before the start of the G20 summit in Argentina.

Industrial output in Japan was up a seasonally adjusted 2.9 percent on month in October, the Ministry of Economy, according to rttnews.

That exceeded forecasts for an increase of 1.1 percent following the 0.4 percent decline in September.

On a yearly basis, industrial production jumped 4.2 percent, again beating expectations for a gain of 2.5 percent following the 2.5 percent drop in the previous month.

Upon the release of the data, the METI raised its assessment of industrial production, saying that it is picking up slowly.

• Several Officials Worried About High Corporate Debt, Especially Leveraged Loans

• Officials Agreed Risks to Economic Outlook Appeared Roughly Balanced

• Financial Conditions Tightened Since Previous Meeting, Officials Said

• Staff Forecast for 2018 GDP Growth 'Little Revised'

• Projected Slightly Lower GDP Growth in Second Half of 2018

• Staff Saw Slightly Weaker GDP Growth over Medium Term, Reflecting Lower Equity Prices

• Forecasts on Unemployment, Inflation Little Revised

• Staff Expects Hurricanes Will Leave No Imprint on US Economy in Second Half of 2018

• Modest 0.3% increase month-on-month

• Net additions to housing stock just 0.6% below 2007 level

Commenting on the figures, Robert Gardner, Nationwide's Chief Economist, said: “While house price growth picked up a little in November, it remained relatively subdued at 1.9%, up from 1.6% the previous month. “Looking forward, much will depend on how broader economic conditions evolve. In the near term, the squeeze on household budgets and the uncertain economic outlook is likely to continue to dampen demand, even though borrowing costs remain low and the unemployment rate is near 40-year lows. “If the uncertainty lifts in the months ahead and employment continues to rise, there is scope for activity to pick-up through next year. The squeeze on household incomes is already moderating and policymakers have signalled that, if the economy performs as they expect, interest rates are only expected to rise at a modest pace and to a limited extent in the years ahead.

As reported by the Federal Statistical Office (Destatis), the index of import prices increased by 4.8% in October 2018 compared with the corresponding month of the preceding year. In September and in August 2018 the annual rates of change were +4.4% and +4.8%, respectively. From September 2018 to October 2018 the index rose by 1.0%.

The index of import prices, excluding crude oil and mineral oil products, increased by 2.4% compared with the level of a year earlier.

The index of export prices increased by 2.0% in October 2018 compared with the corresponding month of the preceding year. In September and in August 2018 the annual rates of change were +1.9% and +2.1%, respectively. From September 2018 to October 2018 the export price index rose by 0.2%.

According to provisional data, turnover in retail trade in October 2018 was in real terms 5.0% and in nominal terms 7.1% larger than in October 2017. The number of days open for sale was 26 in October 2018 and 24 in October 2017.

Compared with the previous year, turnover in retail trade was in the first ten months of 2018 in real terms 1.4% and in nominal terms 3.1% higher than in the corresponding period of the previous year.

• A Few Officials Expressed Uncertainty About Timing of Further Rate Increases

• Statement Language Could Soon Revise 'Further Gradual Increases'

• Future Policy Statements to Emphasize Importance of Incoming Data

• A Couple Officials Said Interest Rates Might Already Be Near Neutral

• Almost All Fed Officials Expected Further Gradual Rate Increases

• A Couple Officials Expressed Concern About Low Inflation

• Fed Officials Divided on Potential for Further Increase in Labor Force Participation

• Many Officials Saw Wage Gains As Consistent With Productivity, Inflation Trends

• A Few Officials Saw Rising Uncertainty in Economic Outlook